Contingent covenant: Difference between revisions
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A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure. | A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure. | ||
A common example is a contingent covenant linked with the borrower's credit rating. | A common example is a contingent covenant linked with the borrower's credit rating. | ||
The existence of such covenants is very significant for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating. | |||
The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating. | |||
== See also == | == See also == | ||
* [[Contingency]] | |||
* [[Contingent]] | |||
* [[Covenant]] | |||
* [[Credit rating]] | * [[Credit rating]] | ||
* [[Maintenance covenant]] | * [[Maintenance covenant]] | ||
* [[Ratings trigger]] | * [[Ratings trigger]] | ||
* [[Springing covenant]] | * [[Springing covenant]] | ||
[[Category:Accounting,_tax_and_regulation]] | |||
[[Category:The_business_context]] | |||
Latest revision as of 20:40, 10 September 2022
Loan documentation.
A contingent covenant is a covenant in borrowings documentation which is contingent on a particular event or measure.
A common example is a contingent covenant linked with the borrower's credit rating.
The existence of such covenants is a very significant source of risk for borrowers which are close to the boundary where the covenant might be triggered, for example following any further deterioration in the borrower's credit rating.
